Results for “air pollution” 134 found
The Unseen Fallout: Chernobyl’s Deadly Air Pollution Legacy
A fascinating new paper The Political Economic Determinants of Nuclear Power: Evidence from Chernobyl by Makarin, Qian, and Wang was recently presented at the NBER Pol. Economy conference. The paper is nominally about how fossil fuel companies and coal miners in the US and UK used the Chernobyl disaster to successfully lobby against building more nuclear power plants. The data collection here is impressive but that is just how democracy works. I found the political economy section less interesting than some of the background material.
First, the Chernobyl disaster ended nuclear power plant (NPP) construction in the United States (top-left panel), the country with the most NPPs in the world . Surprisingly, the Three Mile Island accident in 1979 (much less serious than Chernobyl) had very little effect on construction; albeit the 1-2 punch with Chernobyl in 1986 surely didn’t help. The same pattern is very clear across all countries and also all democracies (top-right panel). The bottom two panels show the same data but looking at new plants rather than the cumulative total–there was a sharp break in 1986 with growth quickly converging to zero new plants per year.
Fewer nuclear plants than otherwise would have been the case might have made a disaster less likely but there were countervailing forces:
We document that the decline in new NPPs in democracies after Chernobyl was accompanied by an increase in the average age of the NPPs in use. To satisfy the rise in energy demand, reactors built prior to Chernobyl continued operating past their initially scheduled retirement dates. Using data on NPP incident reports, we show that such plants are more likely to have accidents. The data imply that Chernobyl resulted in the continued operation of older and more dangerous NPPs in the democracies.
Moreover, safety declined because the existing plants got older but in addition “the slowdown of new NPP construction…delayed the adoption of new safer plants.” This is a point about innovation that I have often emphasized (see also here)
The key to innovation is continuous refinement and improvement…. Learning by doing requires doing….Thus, when considering innovation today, it’s essential to think about not only the current state of technology but also about the entire trajectory of development. A treatment that’s marginally better today may be much better tomorrow.
Regulation increased costs substantially:
The U.S. NRC requires six-to-seven-years to approve NPPs. The total construction time afterwards ranges from decades to indefinite. Cost overruns and changing regulatory requirements during the construction process sometime forces construction to be abandoned after significant sunk costs have been made. This often leads investors to abandon construction after already sunk billions of dollars of investment. Worldwide, companies have stopped construction on 90 reactors since the 1980s. 40 of those were in the U.S. alone. For example, in 2017, two South Carolina utilities abandoned two unfinished Westinghouse AP1000 reactors due to significant construction delays and cost overruns. At the time, this left two other U.S. AP1000 reactors under construction in Georgia. The original cost estimate of $14 billion for these two reactors rose to $23 billion. Construction only continued when the U.S. federal government promised financial support. These were the first new reactors in the U.S. in decades. In contrast, recent NPPs in China have taken only four to six years and $2 billion dollars per reactor. When considering the choice of investing in nuclear energy versus fossil fuel energy, note that a typical natural gas plant takes approximately two years to construct (Lovering et al., 2016).
Chernobyl, to be clear, was a very costly disaster
The initial emergency response, together with later decontamination of the environment, required more than 500,000 personnel and an estimated US$68 billion (2019 USD). Between five and seven percent of government spending in Ukraine is still related to Chernobyl. (emphasis added, AT) In Belarus, Chernobyl-related expenses fell from twenty-two percent of the national budget in 1991 to six percent by 2002.
The biggest safety effect of the decline in nuclear power plants was the increase in air pollution. The authors use satellite date on ambient particles to show that when a new nuclear plant comes online pollution in nearby cities declines significantly. Second, they use the decline in pollution to create preliminary estimates of the effect of pollution on health:
According to our calculations, the construction of an additional NPP, by reducing the total suspended particles (TSP) in the ambient environment, could on average save 816,058 additional life years.
According to our baseline estimates (Table 1), over the past 38 years, Chernobyl reduced the total number of NPPs worldwide by 389, which is almost entirely driven by the slowdown of new construction in democracies. Our calculations thus suggest that, globally, more than 318 million expected life years have been lost in democratic countries due to the decline in NPP growth in these countries after Chernobyl.
The authors use the Air Quality Life Index from the University of Chicago which I think is on the high side of estimates. Nevertheless, as you know, I think the new air pollution literature is credible (also here) so I think the bottom line is almost certainly correct. Namely, Chernobyl caused many more deaths by reducing nuclear power plant construction and increasing air pollution than by its direct effects which were small albeit not negligible.
Air Pollution Redux
New York City today has the worst air quality in the world, so now seems like a good time for a quick redux on air pollution. Essentially, everything we have learned in the last couple of decades points to the conclusion that air pollution is worse than we thought. Air pollution increases cancer and heart disease and those are just the more obvious effects. We now also now know that it reduces IQ and impedes physical and cognitive performance on a wide variety of tasks. Air pollution is especially bad for infants, who may have life-long impacts as well as the young and the elderly. I’m not especially worried about the wildfires but the orange skies ought to make the costs of pollution more salient. As Tyler noted, one reason air pollution doesn’t get the attention that it deserves is that it’s invisible and the costs are cumulative:
Air pollution causes many deaths. But it is rare to see or read about a person dying directly from air pollution. Lung cancer and cardiac disease are frequently cited as causes of death, even though they may stem from air pollution.
That’s the bad news. The good news, hidden inside the bad news, is that the costs of air pollution on productivity are so high that there are plausible ways of reducing some air pollution and increasing health and wealth, especially in high pollution countries but likely also in the United States with well-targeted policies.
For evidence on the above, you can see some of the posts below. Tyler and I have been posting about air pollution for a long time. Tyler first said air pollution was an underrated problem in 2005 and it was still underrated in 2021!
- Why the New Pollution Literature is Credible
- Air Pollution Reduces IQ, A Lot
- Air Pollution Kills
- David Wallace-Wells with a good overview.
- A good overview of the non-health impacts of pollution.
Shruti on Effective Altruism, malaria, India, and air pollution
Look at the decline in malaria deaths in India since the big bang reforms in 1991, which placed India on a higher growth trajectory averaging about 6 percent annual growth for almost three decades. Malaria deaths declined because Indians could afford better sanitation preventing illness and greater access to healthcare in case they contracted malaria. India did not witness a sudden surge in producing, importing or distributing mosquito nets. I grew up in India, in an area that is even today hit by dengue during the monsoon, but I have never seen the shortage of mosquito nets driving the surge in dengue patients. On the contrary, a surge in cases is caused by the municipal government allowing water logging and not maintaining appropriate levels of public sanitation. Or because of overcrowded hospitals that cannot save the lives of dengue patients in time.
There is much more at the link, from Shruti’s new Substack.
Air Pollution and Student Performance in the U.S.
We combine satellite-based pollution data and test scores from over 10,000 U.S. school districts to estimate the relationship between air pollution and test scores. To deal with potential endogeneity we instrument for air quality using (i) year-to-year coal production variation and (ii) a shift-share instrument that interacts fuel shares used for nearby power production with national growth rates. We find that each one-unit increase in particulate pollution reduces test scores by 0.02 standard deviations. Our findings indicate that declines in particulate pollution exposure raised test scores and reduced the black-white test score gap by 0.06 and 0.01 standard deviations, respectively.
That is from Michael Gilraine and Angela Zheng. Maybe you, like me, do not find any one of these studies to be a real clincher. But please do reread Alex on the sum total of the evidence…and here.
Air pollution and the history of economic growth
I have not had the chance to read this through, but here goes:
Documenting environmental pollution damage affects the magnitude of aggregate output, net of pollution damage, and the contribution to national product across economic sectors. For example, air pollution damage from the production side of the economy amounted to over 5 percent of gross domestic product (GDP) in 2002…
I have presented estimates of these effects in the US economy between 1957 and 2016. This period featured the passage of the Clean Air Act (CAA) in 1970 and its subsequent implementation through the 1970s, as well as several business cycles. This research suggests that pollution damage began to decrease just after the CAA was enacted, and the orientation between GDP growth and that of the adjusted measure, or environmentally adjusted value added (EVA), switched.
That is from Nicholas J. Muller, all a bit awkwardly worded. Jeremy Horpedahl is more to the point:
If we use the standard measure of GDP, growth indeed slowed down after 1970. If instead we augment GDP for environmental damages, the period after 1970 was actually faster! The adjustment both slows down growth from 1957-1970, and speeds up growth after 1970.
Worth a ponder.
Air Pollution Reduces Health and Wealth
Great piece by David Wallace-Wells on air pollution.
Here is just a partial list of the things, short of death rates, we know are affected by air pollution. GDP, with a 10 per cent increase in pollution reducing output by almost a full percentage point, according to an OECD report last year. Cognitive performance, with a study showing that cutting Chinese pollution to the standards required in the US would improve the average student’s ranking in verbal tests by 26 per cent and in maths by 13 per cent. In Los Angeles, after $700 air purifiers were installed in schools, student performance improved almost as much as it would if class sizes were reduced by a third. Heart disease is more common in polluted air, as are many types of cancer, and acute and chronic respiratory diseases like asthma, and strokes. The incidence of Alzheimer’s can triple: in Choked, Beth Gardiner cites a study which found early markers of Alzheimer’s in 40 per cent of autopsies conducted on those in high-pollution areas and in none of those outside them. Rates of other sorts of dementia increase too, as does Parkinson’s. Air pollution has also been linked to mental illness of all kinds – with a recent paper in the British Journal of Psychiatry showing that even small increases in local pollution raise the need for treatment by a third and for hospitalisation by a fifth – and to worse memory, attention and vocabulary, as well as ADHD and autism spectrum disorders. Pollution has been shown to damage the development of neurons in the brain, and proximity to a coal plant can deform a baby’s DNA in the womb. It even accelerates the degeneration of the eyesight.
A high pollution level in the year a baby is born has been shown to result in reduced earnings and labour force participation at the age of thirty. The relationship of pollution to premature births and low birth weight is so strong that the introduction of the automatic toll system E-ZPass in American cities reduced both problems in areas close to toll plazas (by 10.8 per cent and 11.8 per cent respectively), by cutting down on the exhaust expelled when cars have to queue. Extremely premature births, another study found, were 80 per cent more likely when mothers lived in areas of heavy traffic. Women breathing exhaust fumes during pregnancy gave birth to children with higher rates of paediatric leukaemia, kidney cancer, eye tumours and malignancies in the ovaries and testes. Infant death rates increased in line with pollution levels, as did heart malformations. And those breathing dirtier air in childhood exhibited significantly higher rates of self-harm in adulthood, with an increase of just five micrograms of small particulates a day associated, in 1.4 million people in Denmark, with a 42 per cent rise in violence towards oneself. Depression in teenagers quadruples; suicide becomes more common too.
Stock market returns are lower on days with higher air pollution, a study found this year. Surgical outcomes are worse. Crime goes up with increased particulate concentrations, especially violent crime: a 10 per cent reduction in pollution, researchers at Colorado State University found, could reduce the cost of crime in the US by $1.4 billion a year. When there’s more smog in the air, chess players make more mistakes, and bigger ones. Politicians speak more simplistically, and baseball umpires make more bad calls.
As MR readers will know Tyler and I have been saying air pollution is an underrated problem for some time. Here’s my video on the topic:
Ordinary air pollution is still an underrated problem
That is the theme of my latest Bloomberg column, here is one excerpt:
More than 10 million people die each year from air pollution, according to a new study — far more than the estimated 2.6 million people who have died from Covid-19 since it was detected more than a year ago. And while Covid is headline news, ordinary air pollution remains a side issue for policy wonks and technocrats.
[To be clear, I am not seeking to minimize Covid as a major issue.] And:
Why aren’t these deaths a bigger issue in U.S. political and policy discourse? One reason may be that 62% of those deaths are in China and India. The number of premature deaths due to particulate matter in North America was 483,000, just slightly lower than the number of measured deaths from Covid to date. An estimated 876 of those deaths were of children under the age of 4.
Another reason for the weak political salience of the issue may be its invisibility. Air pollution causes many deaths. But it is rare to see or read about a person dying directly from air pollution. Lung cancer and cardiac disease are frequently cited as causes of death, even though they may stem from air pollution.
Another problem is that the question of how to better fight air pollution does not fit neatly into current ideological battles. You might think Democrats would emphasize this issue, but much of the economic burden of tougher action would fall on the Northeast, a largely Democratic-leaning area.
And exactly how many people die each year from global warming? Why not have a greater focus on ordinary air pollution?
Air Pollution Reduces IQ, a Lot
The number and quality of studies showing that air pollution has very substantial effects on health continues to increase. Patrick Collison reviews some of the most recent studies on air pollution and cognition. I’m going to post the whole thing so everything that follows is Patrick’s.
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Air pollution is a very big deal. Its adverse effects on numerous health outcomes and general mortality are widely documented. However, our understanding of its cognitive costs is more recent and those costs are almost certainly still significantly under-emphasized. For example, cognitive effects are not mentioned in most EPA materials.
World Bank data indicate that 3.7 billion people, about half the world’s population, are exposed to more than 50 µg/m³ of PM2.5 on an annual basis, 5x the unit of measure for most of the findings below.
- Substantial declines in short-term cognitive performance after short-term exposure to moderate (median 27.0 µg/m³) PM2.5 pollution: “The results from the MMSE test showed a statistically robust decline in cognitive function after exposure to both the candle burning and outdoor commuting compared to ambient indoor conditions. The similarity in the results between the two experiments suggests that PM exposure is the cause of the short-term cognitive decline observed in both.” […] “The mean average [test scores] for pre and post exposure to the candle burning were 48 ± 16 and 40 ± 17, respectively.” – Shehab & Pope 2019.
- Chess players make more mistakes on polluted days: “We find that an increase of 10 µg/m³ raises the probability of making an error by 1.5 percentage points, and increases the magnitude of the errors by 9.4%. The impact of pollution is exacerbated by time pressure. When players approach the time control of games, an increase of 10 µg/m³, corresponding to about one standard deviation, increases the probability of making a meaningful error by 3.2 percentage points, and errors being 17.3% larger.” – Künn et al 2019.
- A 3.26x (albeit with very wide CI) increase in Alzheimer’s incidence for each 10 µg/m³ increase in long-term PM2.5 exposure? “Short- and long-term PM2.5 exposure was associated with increased risks of stroke (short-term odds ratio 1.01 [per µg/m³ increase in PM2.5 concentrations], 95% CI 1.01-1.02; long-term 1.14, 95% CI 1.08-1.21) and mortality (short-term 1.02, 95% CI 1.01-1.04; long-term 1.15, 95% CI 1.07-1.24) of stroke. Long-term PM2.5 exposure was associated with increased risks of dementia (1.16, 95% CI 1.07-1.26), Alzheimer’s disease (3.26, 95% 0.84-12.74), ASD (1.68, 95% CI 1.20-2.34), and Parkinson’s disease (1.34, 95% CI 1.04-1.73).” – Fu et al 2019. Similar effects are seen in Bishop et al 2018: “We find that a 1 µg/m³ increase in decadal PM2.5 increases the probability of a dementia diagnosis by 1.68 percentage points.”
- A study of 20,000 elderly women concluded that “the effect of a 10 µg/m³ increment in long-term [PM2.5 and PM10] exposure is cognitively equivalent to aging by approximately 2 years”. – Weuve et al 2013.
- “Utilizing variations in transitory and cumulative air pollution exposures for the same individuals over time in China, we provide evidence that polluted air may impede cognitive ability as people become older, especially for less educated men. Cutting annual mean concentration of particulate matter smaller than 10 µm (PM10) in China to the Environmental Protection Agency’s standard (50 µg/m³) would move people from the median to the 63rd percentile (verbal test scores) and the 58th percentile (math test scores), respectively.” – Zhang et al 2018.
- “Exposure to CO2 and VOCs at levels found in conventional office buildings was associated with lower cognitive scores than those associated with levels of these compounds found in a Green building.” – Allen et al 2016. The effect seems to kick in at around 1,000 ppm of CO2.
Alex again. Here’s one more. Heissel et al. (2019):
“We compare within-student achievement for students transitioning between schools near highways, where one school has had greater levels of pollution because it is downwind of a highway. Students who move from an elementary/middle school that feeds into a “downwind” middle/high school in the same zip code experience decreases in test scores, more behavioral incidents, and more absences, relative to when they transition to an upwind school”
Relatively poor countries with extensive air pollution–such as India–are not simply choosing to trade higher GDP for worse health; air pollution is so bad that countries with even moderate air pollution are getting lower GDP and worse heath.
Addendum: Patrick has added a few more.
Air Pollution Kills
In recent years I have substantially increased my estimate of the deadly nature of air pollution. It’s not that I had a contrary opinion earlier but the number and range of studies showing surprisingly large effects has raised this issue in relative importance in my mind. I would not have guessed, for example, that the introduction of EZ Pass could reduce pollution near toll booths enough to reduce the number of premature and low birth weight babies. I also find the following result hard to believe yet also hard to dismiss given the the accumulating body of evidence. Diane Alexander and Hannes Schwandt find that Volkswagen’s cheating diesel cars increased the number of low birth weight babies and asthma rates. Here are some details:
In 2008, a new generation of supposedly clean diesel passenger cars was introduced to the U.S. market.These new diesel cars were marketed to environmentally conscious consumers, with advertising emphasizing the power and mileage typical for diesel engines in combination with unprecedented low emissions levels. Clean diesel cars won the Green Car of the Year Award in 2009 and 2010 and quickly gained market share. By 2015, over 600,000 cars with clean diesel technology were sold in the United States. In the fall of 2015, however, it was discovered that these cars covertly activated equipment during emissions tests that reduced emissions below official thresholds, and then reversed course after testing. In street use, a single “clean diesel” car could pollute as much nitrogen oxide as 150 equivalent gasoline cars.Hereafter, we refer to cars with “clean diesel” technology as cheating diesel cars.
We exploit the dispersion of these cheating diesel cars across the United States as a natural experiment to measure the effect of car pollution on infant and child health. This natural experiment provides several unique features. First, it is typically difficult to infer causal effects from observed correlations of health and car pollution, as wealthier individuals tend to sort into less-polluted areas and drive newer, less-polluting cars. The fast roll-out of cheating diesel cars provides us with plausibly exogenous variation in car pollution exposure across the entire socio-economic spectrum of the United States. Second, it is well established that people avoid known pollution, which can mute estimated impacts of air pollution on health (Neidell, 2009). Moderate pollution increases stemming from cheating diesel cars, a source unknown to the population, are less likely to induce avoidance behaviors, allowing us to cleanly estimate the full impact of pollution. Third, air pollution comes from a multitude of sources, making it difficult to identify contributions from cars, and it is measured coarsely with pollution monitors stationed only in a minority of U.S. counties. This implies low statistical power and potential attenuation bias for correlational studies of pollution (Lleras-Muney, 2010). We use the universe of car registrations to track how cheating diesel cars spread across the country and link these data to detailed information on each birth conceived between 2007 and 2015. This setting provides rich and spatially detailed variation in car pollution.
We find that counties with increasing shares of cheating diesel cars experienced large increases both in air pollution and in the share of infants born with poor birth outcomes. We show that for each additional cheating diesel car per 1,000 cars—approximately equivalent to a 10 percent cheating-induced increase in car exhaust—there is a 2.0 percent increase in air quality indices for fine particulate matter (PM2:5) and a 1.9 percent increase in the rate of low birth weight. We find similar effects on larger particulates (PM10; 2.2 percent) and ozone (1.3 percent), as well as reductions in average birth weight (-6.2 grams) and gestation length (-0.016 weeks). Effects are observed across the entire socio-economic spectrum, and are particularly pronounced among advantaged groups, such as non-Hispanic white mothers with a college degree. Effects on pollution and health outcomes are approximately linear and not affected by baseline pollution levels. Overall, we estimate that the 607,781 cheating diesel cars sold from 2008 to 2015 led to an additional 38,611 infants born with low birth weight. Finally, we also find an 8.0 percent increase in asthma emergency department (ED) visits among young children for each additional cheating diesel car per 1,000 cars in a subsample of five states.
Another surprising result is that on a global scale air pollution reduces life expectancy more than smoking. In part, because a single individual can’t quit air pollution.
Globally, the AQLI reveals that particulate pollution reduces average life expectancy by 1.8 years, making it the greatest global threat to human health. By comparison, first-hand cigarette smoke leads to a reduction in global average life expectancy of about 1.6 years. Other risks to human health have even smaller effects: alcohol and drugs reduce life expectancy by 11 months; unsafe water and sanitation take off 7 months; and HIV/AIDS, 4 months. Conflict and terrorism take off 22 days. So, the impact of particulate pollution on life expectancy is comparable to that of smoking, twice that of alcohol and drug use, three times that of unsafe water, five times that of HIV/AIDS, and more than 25 times that of conflict and terrorism.
Will China beat the United States in the fight against air pollution?
There are now pollution red alerts in at least 24 cities in north China, so are things really hopeless in the Middle Kingdom? I say no. That is the topic of my latest Bloomberg column, here are some excerpts:
One famous paper, by economists Gene M. Grossman and Alan Krueger, found that (in current dollars) the turning point for environmental improvement comes in “almost every case” when countries reach the range of $17,000 to $18,000 in per capita annual income. Current Chinese per capita income can be plausibly estimated at over $14,000 per year. That means China may not be far from starting to clean up its air, and indeed air quality is already one of the major political issues in China.
The Chinese government already responds to pollution problems with factory closings and automobile restrictions more quickly than it used to, and in general there is better data and more transparency from policymakers. The U.S. Embassy in Beijing reports pollution improvements for particulate matter over the last year. Over the last two years, there have been suggestions, admittedly debatable ones, that China’s evolution into a service-sector economy means that the turning point already has been reached.
What about the U.S. and its history of fighting air pollution?
By my estimates (see the column), the United States started cleaning up at a per capita income of at least 28k (in current dollars), in the mid-1960s, arguably later than that date. In other words, if the Chinese waited to start cleaning up their air until they were about twice as rich as is currently the case, they still would be matching the pace of America.
The altruistic logic of Chinese air pollution?
Kai Xue writes:
But I say in plain honesty that terrible air pollution while taken as mandarin indifference to public demands is to the contrary a manifestation of commitment to a mass middle class by the Chinese political system.
Policy deliberately trades off public health for blue collar jobs. Around Beijing are industries including steel mills and cement plants that are major polluters. About 1 in 10 tonnes of the world’s steel output is smelted in Hebei, the province surrounding Beijing. With so much local heavy industry, cleaning the air would start with plant closures that cause concentrated unemployment.
Whether this bargain of clean air for economic growth is a good deal is a fair question but whether it is virtuous public policy depends on the extent decision-makers are subject to or instead insulated from the consequences of self-produced actions.
Beijing is the seat of power in a centralized state. About one third of the thousands who hold junior ministerial rank or higher and many of the very rich reside here.
Regardless of stature, for every Beijing inhabitant air pollution is the most serious public concern.
That is from an Atlantic article by James Fallows.
Indoor air pollution
Perhaps the most pressing environmental problem in the world is indoor air pollution, which kills 2.8 million people each year, just behind HIV/AIDS. The pollution is caused by poor people cooking and heating their homes with dung and cardboard. The solution is not environmental (to certify dung) but rather economic, helping these people build enough wealth to afford kerosene.
That is by Bjorn Lomborg, in Foreign Policy, July/August issue.
Two caveats. First, the best figure I can find appears to be 1.6 million lives; here is a WHO statement on the phenomenon. Second, the people die because the smoke renders them more susceptible to pneumonia and other respiratory diseases. But their poverty makes them more susceptible for a number of reasons. I doubt if the marginal product of the smoke can be isolated clearly; see this study. Nonetheless this is a very very serious problem that does not receive much attention.
Reducing Pollution in India with a Cap and Trade Market
India has some of the worst air pollution in the world. India regulates pollution but it uses a command and control approach with criminal penalties, a system in tension with enforcement given low-state capacity. The result has been widespread corruption, inefficiency, and poor enforcement of pollution controls. In a very important paper, Greenstone, Pande, Ryan and Sudarshan report on an experiment with a market for particulate matter in Surat, India. In fact, this is the first particulate-matter market anywhere in the world.
The experiment created two sets of firms, the treatment set were required to install continuous emission monitoring systems (CEMS) which measured the output of particulate matter. The control set of firms remained under the command and control system which required the installation of various pollution control devices and spot checks. Firms were randomly assigned to treatment or control. Pollution at treatment firms was capped and permits were issued for 80% of the cap so firms could pollute at 80% of the cap for free. Permits for the remaining 20% of the cap were sold at auction and trading was allowed. Treatment plants which polluted more than their permits allowed paid substantial fines, about double the cost they would have paid to buy the necessary permits.
The one and half year experiment revealed a great deal of importance. First, the CEMS systems and the switch to financial penalties reduced the cost of enforcement so that essentially all firms quickly came into compliance. Second, trading was vigorous, which indicated that firms have heterogeneous and changing costs. Moreover, by allowing for a more information rich market the costs of achieving a given level of pollution fell. Pollution costs were 11% lower in treatment firms compared to control firms at the same level of pollution. The value of trade in lowering abatement costs illustrates Hayek’s idea that one of the virtues of markets is that they make use of information of particular circumstances of time and place. In fact, since the costs of achieving a given level of pollution were low, the authorities decreased the cap so that the treatment firms reduced their pollution levels significantly relative to the control firms.
The CEMS systems were a fixed cost but because abatement costs decreased, the overall expense was reasonable. The need for monitoring systems and procedures highlights Coase’s insight that property rights in externalities must be designed and enforced, the visible and invisible hand work best together.
Using estimates on a statistical life-year in India of $9,500 (about 1/10th to 1/30 the level typically used in the US) the authors find that the benefits of substantial pollution reduction exceed the costs by a factor of 25:1 or higher.
I have emphasized (and video here) that there are significant productivity gains to reducing air pollution which would make these benefit to cost ratios even higher. Less pollution can mean more health and more wealth.
The authors are especially to be congratulated because this paper began in 2010 with discussions with the Gujurat Pollution Control Board. It took over a decade to implement the experiment with the authors helping to design not just the market but also the technical standards for CEMS monitoring. Amazing. The success of the system is already leading to expansion across India. Bravo!
Hat tip: Paul Novosad.
Indoor Air Quality and Learning
More on the surprisingly large effects of air pollution on cognition from Palacios, Eichholtz, Kok and Duran:
Governments devote a large share of public budgets to construct, repair, and modernize school facilities. However, evidence on whether investments in the physical state of schools translate into better student outcomes is scant. In this study, we report the results of a large field study on the implications of poor air quality inside classrooms − a key performance measure of school mechanical ventilation systems. We continuously monitor the air quality (i.e., CO2), together with a rich set of indoor environmental parameters in 216 classrooms in the Netherlands. We link indoor air quality conditions to the outcomes on semi-annual nationally standardized tests of 5,500 children, during a period of five school terms (from 2018 to 2020). Using a fixed-effects strategy, relying on within-pupil changes in air quality conditions and test results, we document that exposure to poor indoor air quality during the school term preceding a test is associated with significantly lower test results: a one standard deviation increase in the school-term average daily peak of CO2 leads to a 0.11 standard deviation decrease in subsequent test scores. The estimates based on plausibly exogenous variation driven by mechanical ventilation system breakdown events confirm the robustness of the results. Our results add to the ongoing debate on the determinants of student human capital accumulation, highlighting the role of school infrastructure in shaping learning outcomes.
Note that the authors have data on the same students in high and low pollution episodes, allowing them to control for a wide variety of other factors.
Here are previous MR posts on air pollution including Why the New Pollution Literature is Credible and our MRU video on the Hidden Costs of Air Pollution. Note that you can take lower bounds of these effects and still think we are not paying enough attention to the costs of air pollution.
Pollution and Macro Inequality
Combining 36 years of satellite derived PM2.5 concentrations with individual-level administrative data provided by the U.S. Census Bureau and Internal Revenue Service (IRS), we provide new evidence on the important role that disparities in air pollution exposure play in shaping broader patterns of economic opportunity and inequality in the United States. We first document that early-life exposure to particulate matter is one of the top five predictors of upward mobility in the United States. Second, we exploit regulation-induced reductions in pollution exposure from the 1990 Clean Air Act Amendments to produce new age-specific estimates of pollution-earnings relationship. Combined with individual-level measures of pollution exposure during early childhood, we calculate that disparities in air pollution can account for 17-26 percent of the Black-White earnings gap, 5-27 percent of the Hispanic-White earnings gap, and 6-20 percent of the average neighborhood-earnings effect (Chetty and Hendren, 2018; Chetty, Hendren, and Katz, 2016). Collectively, our findings indicate that environmental inequality is an important contributor to observed patterns of racial economic disparities, income inequality and economic opportunity in the United States.
That’s Colmer, Voorheis and Williams summarizing Air Pollution and Economic Opportunity in the United States. The authors also estimate that
…a 1 μg/m3reduction in prenatal PM2.5 exposure is associated with a $1,105 increase in later-life W-2 earnings and…a 1 μg/m3 reduction in prenatal PM2.5 exposure is associated with a 1.29 percentile rank point increase in upward mobility…We estimate pollution-earnings relationships for each age of exposure from birth to age 12 and show that the relationship between pollution exposure and earnings is stable up to age 4 and then diminishes quickly. We do not estimate a meaningful relationship between particulate matter exposure and later-life earnings from age 8 onward.
These estimate are big but given the substantial number of micro-estimates of the effect of pollution on IQ and cognition that Tyler and I have discussed before (see also this video) substantial effects at the macro level are almost inevitable.